Advertisment

Interview - Dewang Mehta

author-image
CIOL Bureau
Updated On
New Update

What are the strategies that have been outlined by Nasscom for

1999-2000 for the Indian software industry?




While we are entering the next millennium, we can feel satisfied that
we have almost realized our targets and achieved the strategy of an

initial phase of growth in software and service industry in India. We have

started putting in place a strategy for the next phase of growth for our

industry.

Advertisment

We strongly believe that contrary to many other predictions, the post

Y2K scenario is much more brighter for Indian software exports, then the

revenues generated from opportunities in Y2K. For example, out of the

total software exports of US $2.65 billion during 1998-99, only about 20

per cent of the revenue came from Y2K solutions. But, post-Y2K will bring

us revenues from e-commerce solutions, IT enabled services, euro

solutions, Interactive integration, ERP services and "fall-outs"

from Y2K etc.

Our current strategy is to continue the reap of benefits in legacy and

`client-server’ export markets; make a dashing entry into e-commerce

solutions and IT enabled services and seed for software products and

original IPR. To describe this strategy, we are currently reaping the

harvest of work done by our software professionals as far as legacy

systems, client-server systems are concerned and we are doing good

offshore / onsite, remote maintenance work. The next step of seeding is to

create software products and packages and grow rapidly into IT enabled

services, e-commerce solutions, web based technologies and then provide

(in not so distant future) into the whole area of interactive

architecture, which is a combination of legacy systems alongwith

e-commerce solutions. This kind of strategy for exports would continue to

see that we get more than 50 per cent growth every year and that we can

much faster realize our $50 billion software export target by 2008.

However, as far as domestic market is concerned, there is lot of work

to be done to create a continued growth rate. For example, just now our

concentration is very high on banking, defence and government, which means

we want government to computerize, banks to computerise and defence and

industry to collaborate.

Advertisment

We recently organised a conference `IT@BANK.COM’, which was a huge

success. The Chief Vigilance Commissioner (CVC) has issued guidelines that

70 per cent of banks should be computerised by 2001. These guidelines are

really helping us. Such an action would translate to lot of domestic

market computerisation. The other promising segment is government i.e.

e-governance. The National IT Taskforce has recommended 1-3 per cent of

government spending should be towards computerisation and we can already

see that happening. These two segments alone can give us lot of growth

rate in domestic market.

Apart from these, there are certain other markets, which are moving

fast, such as the SOHO market. In these segments, we are working for

Internet and e-commerce proliferation. There are other manufacturing

segments which are getting computerised because of adopting to e-business

strategies.

What according to you are the three most important factors that will

help India achieve the $50 billion target by 2008?



According to me, the most important factor will continue to be the

people and vendor sophistication from India. Our professionals continue to

be one of the best in the world.

Advertisment

The first factor would be to continue to strengthen global brand equity

for the Indian software industry. We have to continue to create new

markets informing them about the success stories and reaching out to new

users while retaining the existing ones.

The second would be constant removal of bottlenecks in policies and

assist to create proactive policies by Government of India so that

interference by government can be reduced and a free and nurturing

environment can be created.

The third would be India’s strategy to keep in pace with the global

IT demands and state-of-the-art technologies, so that we are ahead of

others. Whether it is IT enabled services, e-commerce solutions, knowledge

management - whatever may be the new trends, it is imperative that India

keeps ahead with these technologies.

Advertisment

The fourth factor would be that we increase our pace for good

infrastructure in the country. This essentially means good telecom

infrastructure and others.

During the beginning of this decade, some of the primary aims of

Nasscom were to get governmental support and duty exemptions. How far do

you think Nasscom has been successful in getting the support of the

government? The lack of government spending on IT is still considered as

one the major factors towards limited growth of hardware in the country?

What do you think is the future role of Nasscom in the growth of software

industry in India?




I agree with your assessment that one place where Nasscom has really
succeeded is its lobby efforts with the government. On the contrary, in

1991, when I used to say, we are a lobby group, people used to take

offence. How can you call an association a lobby group? But we were

honest. We were not lobbying for something that was a vested interest. We

were lobbying for something that was good for the entire industry, good

for the country as well as good for the people of the country. That is the

philosophy at Nasscom. We do not lobby for something that is only good for

the industry, but is not good enough for the country or the people of our

country.

For example, high duties on software were bad for the industry,

country, as well as for users. We lobbied for zero duty on software and we

got that. There are some people in other industries who want higher duties

because they want to protect themselves. With higher duties you do not

benefit the country because even the revenues generated are not high. On

the other hand the growth rate diminishes. Secondly, high duties do not

benefit the people of the country because they have to pay more for the

same products. That is why in software we wanted zero duty.

Advertisment

At the same time, we also realized that if we cannot compete with

multinationals in our own country, there is no way we can compete with

them globally. If you notice that from 1991 our track record has been very

strong in reducing government interferences, making their policies

pro-active etc. For example in 1991, we lobbied and made Government of

India introduce Section 80 HHE included in the Income Tax Act. This

allowed profits from software exports to be exempted from income tax. In

the same year, we lobbied with VSNL / STP and got high-speed datacom links

and that has been the magical formula for doing offshore software

development. The high speed 64 kbps and above (even 2 mbps) has helped to

increase offshore development as a delivery model for software exports.

Then the whole scheme of STP and software development in EOU / EPZ, which

we lobbied for, so that it is easier to do software development in the

country. And then various schemes like EPCG Scheme, Special import licence

schemes and so on. We also effectively lobbied with government for changes

in Copyright Act and that has been another factor for growth in the

software industry. It was our continuous efforts, which brought zero duty

on software in 1997, from a high of 114 per cent in 1991.

Now as far as government spending is concerned, we lobbied with the

National IT Task Force in 1998, and today the Government has issued

guidelines that 1-3 per cent Government department spending should be

towards computerisation. We are now working pro-actively with many state

governments to create IT policy and more implementation through public

procurement policy. You will soon see high spending towards IT in

government.

What are the effects of software piracy in India and how do you see

that changing in the next five years?




We believe that litigation is not the only way to curb software
piracy. It was in 1992, that we realized that Indian Copyright Act was not

sufficient to protect intellectual property rights in India or to

encourage Indians to create original IPR in the country. We lobbied with

the government for changes in the Copyright Law. Although, the government

at that stage, wanted to understand as to why we wanted these changes - as

they thought it would benefit only the overseas companies. We said, maybe

initially it would, but in the long run it would encourage Indians to

create their own IPR. The government saw our point and in 1994, the

copyright act was amended. On 10 May 1995 it was enforced.

Advertisment

We have been measuring the levels of software piracy every year since

1995 and this has continuously come down. Software piracy in 1994 for

example, was 89 per cent. In 1995 it was brought down to 78 per cent.

Later in 1996 it was came down to 73 per cent; In 1997 it was down to 68

per cent, 1998 — 63 per cent and 1999 — 60 per cent. In next five

years, our target is to have the least amount of software piracy in the

world as far as percentage is concerned. USA today has the least amount of

software piracy, which is at 27 per cent. Our aim would be to have piracy

at an even lower rate than the US rate and ultimately aim for zero piracy.

With regard to software piracy in India, has Nasscom been successful in

changing the mindset of users? Who do you think does the responsibility

lie in reducing piracy?




Of course, as I mentioned it is not only that we are facilitating
police raids, we are also organizing seminars, talking to companies /

government officials explaining to them, as to what constitutes software

piracy and why they should not indulge in the same. To some extent, we

have changed the mindset. However, much more work needs to be done. Of

course in some people, there is a need to put the fear of arrest in their

mind.

What future programs have you chalked out for anti-piracy?



We have a lot of ongoing programs like our anti-piracy hotline at
Delhi. Organization of software management seminars to educate people;

training for specialized police and judiciary so that they understand the

nuances of software piracy.

Advertisment

Our future plans include many other activities. We are also working

with the government towards a scheme through which every EDP manager in a

government department or PSU will verify and sign a statement that

according to him / her, no pirated software is being used in his/her

department and he/she would see that no such pirated software will be

used. When a government officer signs such a statement, it carries a lot

of meaning.

The second is that we are working with software companies to allow site

licences or corporate licences which will allow people to manage their

software better. We also have plans to see that computer training

institutes in the country only use legal software.

Also, our anti-piracy hotline is soon expected to be a toll free

hotline, wherein the callers can report suspected cases of software

piracy; they can ring up from any place in the country and will not have

to pay for it; they can enquire as to where to buy original software. We

are also working with various state governments to create IPR cells in

various state governments and police departments etc.

What are the conclusions of the e-commerce survey that was conducted by

Nasscom?




Through our e-commerce survey in July 1999, for the first time we
could find out the actual volume of e-commerce transactions in the

country. Our survey indicated that in 1998-99, the total e-commerce

transactions in the country was Rs 131 crore. To some this may sound high

or low, but if one understands the lack of infrastructure or regulatory

framework in our country, then in such conditions. this seems to be quite

a reasonable figure.

However, we believe that if the e-commerce laws or the `Information

Technology Bill’ gets approved by the parliament and the infrastructure

really grows as it has been envisaged, especially with private ISPs being

allowed their own gateways - then e-commerce can really grow,

exponentially.

In such a situation, we strongly believe that by end of next three

years, annual e-commerce transactions can exceed Rs 10,000 crore. Moreover

in 2002, the software industry has a great chance to earn more than $ 1

billion annually out of software exports in providing e-business solutions

and maybe about Rs 3,000 crore from the domestic market in providing

e-business solutions. So the bottlenecks are the infrastructure and the

regulatory framework and then e-vyapar is really going to take off in this

country.

How do you see call-centres picking up in India? What is its potential

in India?




Because of many factors like availability of large number of English
speaking graduates and high quality of people, infrastructure coming up in

pockets, the Indian ability to be multilingual and relatively low costs,

call-centres are fast emerging as a major opportunity for India.

Government of India has recently announced new guidelines for call centres.

Though much more work needs to be done there. I feel that call centres

will help create lot of employment in the country.

In 2008 we are expecting about 1,00,000 people to be employed in the

call center industry with a revenue of 6,000 crore as against 1,400 people

and a revenue of Rs 40 crore in 1998.

Do you see Nasscom promoting call-centres?



Yes definitely. We had organised the first Indian conference on `IT
Enabled Services’ at New Delhi in May 1999. This conference was attended

by more than 800 people. Again, we lobbied with the government and made

them announce "call centre" guidelines which allowed call

centres to operate and this included international centres, as well as

domestic call centres. However, these guidelines although initiate a new

beginning but are not comprehensive and still do not address all the

bottleneck issues. So, we are lobbying with government for comprehensive

guidelines.

We are also organizing workshops and conferences to train people and

tell entrepreneurs about the avenues of business. We are also scheduling

conferences / buyer-seller meet at USA, where we facilitate networking

between companies that need call centres and companies than have / can

set-up call centres. NASSCOM has now opened a very strong IT Enabled

Services Division provides consultancy on Call Centres, Medical

Transcription, Content development etc.

Do you see a shift in software exports from the US to Europe?



No, I do not think it is a question of software exports. Our market is
growing very strongly by more than 50 percent every year, so we are always

looking for new market opportunities. In 1991, when our exports were close

to 100 million dollars, almost 95 per cent was exported to USA and 5 per

cent to Europe.

In 1998-99, when we have exported software and services worth $2.65

billion dollars, almost 23 per cent was exported to Europe and 60 per cent

to USA. This does not mean that there has been a shift in market. Exports

to USA have increased from $95 million to almost $1.7 billion in eight

years. The growth has been phenomenal, but at the same time, in Europe the

growth has been from $5 million in 1991 to almost $500 million in 1998.

So, Europe has a lot of potential, but USA would remain the star and

biggest market for all of us. But our efforts in Europe are paying good

dividends now and we are seeing good growth rates in this market also.

Which are the software segments that the European market might find

attractive from India?




It is difficult to generalise, but I would say that in near future the
segments may include - Euro solutions, E-commerce solutions, ERP services,

IT Enabled services, interactive architecture (e-commerce solutions

through legacy systems).

How many international events has Nasscom taken part / proposes to take

part during this year? What are the advantages in such participations?




Well, we not only take part in international events, but we also
create our own international events. For example, we regularly participate

in three regular international events every year. These included

COMDEX/Fall at Las Vegas in November, GITEX at Dubai in October and CebIT

Fair at Hannover, Germany in March.

Apart from this, we take delegations to various events. We create

"Software India Seminars", which is a combination of conference

and buyer-seller meet. This year, we have organised eight `Software India’

seminars. This year, we are also organising Nasscom’s IDEAS tour to USA,

wherein we will take a delegation of young start-up companies with

innovative products / ideas and are making them meet investors, bankers,

angel investors, venture capitalists, take them to NASDAQ, NYSE etc. Now,

we are also expanding our Software India Seminars in Korea, Japan,

Australia, South Africa, apart from Middle East, Europe and USA. We have

recently signed MoUs with Israel, Korea and other countries.

These events are major brand equity creation exercises and directly

bring export orders to the participating companies. We also do

advertorials for various international magazines like Business Week,

Forbes and Fortune.

What are the obstacles in India for software exports? When do you think

these will be overcome?




I think, in our country, while we keep removing obstacles, new ones
also get created. There is a constant work to remove bottlenecks and

problems. I do not think there is one stage which is ideal, where all

bottlenecks will be removed. However, at this stage, majority of

bottlenecks have been removed. However some of the issues which need to be

resolved are :

- Global parity in tariff and infrastructure of telecom / internet is

required.



- Physical bonding of equipment in Software Technology Parks / EOU/ EPZ
needs to be removed.



- Indian Telegraph Act 1885 needs to be changed so that Internet
telephony is allowed.



- More coordinated work by Government of India at WTO for getting
trade-related visas abd movement of natural persons.



- Removal of non-tariff trade barriers etc.


Some of the IT companies pursue the practice of taking software

professionals on contract. Very frequently these software engineers break

the contract, seeking greener pastures, causing lot of friction with the

employers. What is your opinion on this issue? We understand that the

Supreme court had already declared such contract null and void. Do you see

Nasscom playing any role in this issue?




Well, we strongly believe in democracy. Every person has a right to
join or leave a company. But, at the same time, there are certain code of

conducts or ethics, like when a person joins a company, he / she should

not leave till the responsibility they have been assigned is completed or

handed over to a new person, which is probably execution of a contract or

a milestone. These are sort of good understandings which need to be

created between the employer and the employee and Nasscom respects that.

On the contrary, a code of conduct at Nasscom is that one company will

not induce a person from another member company to join them. However, if

he / she applies, it is another matter. As far as people leaving the

company and migrating overseas is concerned, ours is a democratic country.

Brain drain will happen till we create great opportunities in the country.

That is the reason, we have been lobbying with the government and with

opportunities increasing in the country, we also see "reverse brain

drain" happening. We believe strongly in democratic code of conduct

to be followed and some kind of conduct between employers and employees,

wherein neither employers get harassed nor employees are put into problem.

The growth in Internet subscriber base has seen no significant

improvement during the last few months despite the advent of the private

ISPs. What are the reasons for it? Have we reached a saturation level

already? When do you think the sudden boost would be observed?



Here, I feel the ISP policy has not yet been fully implemented. We
just have private ISPs getting their licences. However, one important

bottleneck is bandwidth. The private ISP still have to go through the

monopoly service provider. And same is situation with basic service

provider, which in most states is monopoly. So this needs to be sorted

out. Now that government has announced the policy so that private ISPs can

set up their own international gateways, this will remove many

bottlenecks.

Also, Internet through cable TV is yet another shining example,

although the quality of cable might not be good in many places, things are

bound to change. Entrepreneurship would take its lead here. India

currently has only 3.2 million base of installed PCs, whereas we have 37

million cable TV connections. I feel in India the leapfrogging of Internet

would be more through TV than just PCs.

When are the cyber laws expected to be ratified? Is it sensible for the

industry to wait for the ratification to jump into e-commerce in India?




Take the example of `Rediff-on-the-net’. It is doing e-business even
without `cyber laws’. Cyber laws which is mainly the `Digital Signature

Act’ gives a sort of security to consumers when they do e-business

transactions with a credit card. But B2B transactions can still take

place. However it is better to quickly enact cyber laws in our country. I

feel the winter session of Parliament will see lot of action and we will

have cyberlaws in place by December 1999.

It is believed that the Indian consumers, who have not gone through

legacy technologies of consumerism, may find it difficult to accept

e-commerce directly? Your comment.




I do not agree with this. On the contrary, the Indian consumer is
extremely price sensitive, extremely savvy and understands what he / she

is doing. Look at www.bababazaar.com - a simple portal in Delhi has done

in selling groceries and vegetables over the Internet and people have

adopted to it. I was in Rajkot which is in Saurashtra in Gujarat, and

people are doing e-matka there. Sheetal and Roopam the departmental

stores are selling their saris and suits over the net. The examples are so

many. I think it is advantageous that we did not computerise so much in

the last 15-20 years. For this, the first advantage is that we do not have

so much of Y2K problem. In next five years, I feel India would be at the

forefront of e-commerce. We actually adapt very fast, if we want to. And

today, people of my country do want to make her a superpower.

tech-news